The Political Economy of Growth: Institutions and Incentives for Investment

Abstract

Many of the most significant and durable barriers to economic growth – conflict, instability and poor economic governance – are the product of particular political economies in which leaders and ordinary people face incentives to focus on short-term personal gain and security rather than long-term investments in stability, national infrastructure, and sustainable development. Removing these barriers requires us to understand the way in which institutions and information shape the decisions made by individuals at all levels of the political game. This paper summarizes the contribution of Phase 1 of the iiG research programme on the political economy of growth in three specific dimensions: electoral accountability, conflict and instability, and public services.